PPI Vice President Ben Ritz joined The Briefing on SiriusXM to discuss the consequences of this government shutdown, why it happened in the first place, and ideas for how Congress can bring it to an end.
Category: Uncategorized
Kahlenberg in Washington Monthly: Who deserves opportunity in Trump’s America?
In his latest piece for the Monthly, legal scholar Rick Kahlenberg wrote about the College Board’s shameful termination of “Landscape,” a college recruiting tool designed to identify promising students from low-income communities, regardless of their race. Rick called it “the worst kind of capitulation” to Trump.
What’s significant about Rick’s stance is that he’s among the nation’s most prominent opponents of race-based affirmative action in college admissions. In fact, he testified against the practice in Students for Fair Admissions v. Harvard—the landmark Supreme Court case that made racial preferences in college admissions illegal.
Rick argues that race-neutral admissions policies are not only acceptable but should even be encouraged. The result would be more diversity, but on terms that Americans believe fair. Trump, on the other hand, is waging war on diversity itself.
Read more in The Washington Monthly.
U.S. imports from Russia are up 30% this year, likely to hit $5 billion
FACT: U.S. imports from Russia are up 30% this year, likely to hit $5 billion.
THE NUMBERS: U.S. fertilizer imports,
January – July 2025* –
| Total | 25.3 million tons |
| Canada | 7.9 million tons |
| Russia | 3.3 million tons |
| Saudi Arabia | 0.8 million tons |
| Qatar | 0.7 million tons |
| All other | 12.7 million tons |
* U.S. International Trade Commission Dataweb
WHAT THEY MEAN:
Secretary of State Marco Rubio used a September 23 NBC appearance to term it “absurd” that some EU countries are still buying Russian energy. As the EU develops a new set of sanctions on Russian use of cryptocurrency, “shadow fleet” oil transport, and banking, the Trump administration has cited these purchases to avoid new sanctions on Russia itself. A day before Rubio’s appearance, though, Politico trade reporter Doug Palmer published a startling find about the United States’ trade with Russia:
“Russia’s fertilizer exports to the United States are rebounding in 2025 after falling in 2023 and 2024, according to Commerce Department data. The data also shows that U.S. imports of Russian enriched uranium and platinum are on their way to higher levels this year. In total, imports from Russia are up nearly 30 percent from 2024, and could reach close to $5 billion by the end of the year.”
Not only have U.S. imports from Russia jumped, but the Russian fertilizer and specialty metals — mainly platinum-group metals palladium and rhodium, used in catalytic converters, along with the uranium — still arrive duty-free despite the tariffs the Trump administration has imposed on similar goods from allies and other suppliers. Here’s the background:
Before the war in 2021, American purchases from Russia looked like this:
| Total | $29.7 billion |
| Energy | $16.9 billion |
| Rhodium | $0.7 billion |
| Palladium | $1.6 billion |
| Uranium | $0.7 billion |
| Fertilizer | $1.2 billion |
| Seafood | $1.1 billion |
| Diamonds | $0.3 billion |
| All else | $7.1 billion |
Two weeks after Vladimir Putin launched his invasion of Ukraine in February 2022, the Biden administration banned Russian energy, diamonds, seafood (mainly Arctic crab), and luxury goods. As they fell to zero, American imports of Russian goods accordingly dropped by 90%, from the $29.7 billion of 2021 to $3.0 billion in 2024. Biden’s team left a couple of holes, though, as it didn’t ban fertilizer or specialty metals. The EU’s Russian imports are down from $174 billion in 2021 to $36 billion.
A week later, Congress withdrew Russia’s ‘Most Favored Nation’ tariff status. Legally, this shifts tariff rates from the generally low ones of the normal, Congressionally authorized tariff schedule to those set in the 1930 “Smoot-Hawley” tariff bill. For most countries, this would be a very big hit, shriveling up the trade that the Biden administration hadn’t already banned. But as we noted at the time, Russia was an unusual exception. The Congressional tariff-writers in 1930 wanted high rates on finished manufactured goods and farm products, but low ones or zero on natural resources and other factory and farm inputs. In practice, that’s mostly what Russia was selling: the ‘non-MFN’ tariffs on fertilizer (see Column 2 here) are all zero, as are those on uranium, palladium, and rhodium. So withdrawal of MFN status didn’t matter for these things.
The Trump administration’s April tariff decrees, meanwhile, exempted Russian goods on the unconvincing grounds that the U.S. already sanctions Russia in other ways. In practice, that means leaving Russian fertilizer and metals duty-free. Mr. Trump’s July 31 decree then taxed identical stuff from other sources at 10% and up: 10% on fertilizer from Saudi Arabia or Qatar, and 15% if it’s from Nigeria, Israel, or Trinidad; 30% on South African palladium and rhodium. (Canadian fertilizer and potash remain duty-free for now under the bruised-but-still-in-force “U.S.-Mexico-Canada Agreement”.) So Russia is now picking up market share at their expense. In sum, as Palmer notes, imports from Russia are up about 30% this year and are likely accelerating.
Across the Atlantic, meanwhile, the EU — after some strong persuasion of the populist semidemocrats in Hungary and Slovakia, the main European buyers of Russian oil and gas — is supposed to stop buying Russian energy altogether by the end of 2027. Mr. Rubio isn’t wrong to urge them to stop sooner, though it’s hard to see why that means the U.S. should hold back on financial and shipping sanctions. And with U.S. imports of Russian fertilizer and metals jumping this year, Europeans aren’t alone in earning adjectives like “absurd.”
FURTHER READING
PPI’s four principles for response to tariffs and economic isolationism:
- Defend the Constitution and oppose rule by decree;
- Connect tariff policy to growth, work, prices and family budgets, and living standards;
- Stand by America’s neighbors and allies;
- Offer a positive alternative.
Radio Free Europe/Radio Liberty on new EU sanctions proposals.
On NBC last month, Sec. Rubio’s strong words for European buyers of Russian energy.
… and a day earlier, Palmer reports for Politico Pro (subs. req.) on rising U.S. fertilizer and metal imports from Russia.
Policy:
The Biden administration’s bans on energy, seafood, diamonds, and luxuries.
The EU’s current schedule for ending Russian energy buying.
Data:
Census’ topline summary of U.S.-Russia trade by month.
Finland-based Centre for Research on Energy and Clean Air tracks purchasing of Russian energy by country; also see their aggregate totals.
The U.S. Energy Information Agency on U.S. energy production, importing, exporting, and use.
And the U.S. Geological Survey on platinum-group metal uses, reserves, production, and trade.
PPI perspectives:
PPI’s New Ukraine Project, led by Kyiv-based Tamar Jacoby, reports on Ukrainian economic reform, the mood at the front, military industry growth, and more.
Energy and Climate Policy Director Elan Sykes (2023) on American liquefied natural gas as a replacement for European purchases of Russian energy.
And our Trade Fact reminder: Isolationism and appeasement are dangerous.
ABOUT ED
Ed Gresser is Vice President and Director for Trade and Global Markets at PPI.
Ed returns to PPI after working for the think tank from 2001-2011. He most recently served as the Assistant U.S. Trade Representative for Trade Policy and Economics at the Office of the United States Trade Representative (USTR). In this position, he led USTR’s economic research unit from 2015-2021, and chaired the 21-agency Trade Policy Staff Committee.
Ed began his career on Capitol Hill before serving USTR as Policy Advisor to USTR Charlene Barshefsky from 1998 to 2001. He then led PPI’s Trade and Global Markets Project from 2001 to 2011. After PPI, he co-founded and directed the independent think tank ProgressiveEconomy until rejoining USTR in 2015. In 2013, the Washington International Trade Association presented him with its Lighthouse Award, awarded annually to an individual or group for significant contributions to trade policy.
Ed is the author of Freedom from Want: American Liberalism and the Global Economy (2007). He has published in a variety of journals and newspapers, and his research has been cited by leading academics and international organizations including the WTO, World Bank, and International Monetary Fund. He is a graduate of Stanford University and holds a Master’s Degree in International Affairs from Columbia Universities and a certificate from the Averell Harriman Institute for Advanced Study of the Soviet Union.
Read the full email and sign up for the Trade Fact of the Week.
Ainsley for The Liberal Patriot: Can Liberal Patriotism Save Britain From the National Populists?
Under pressure from the national populists and a restless party, British Prime Minister Keir Starmer has come out fighting. His landmark speech to the Labour Party Conference in Liverpool last week gave his premiership more definition than ever before, firmly in the mold of the modern liberal patriot.
It is political definition that has never been more needed. On the eve of its annual conference, Labour had been rattled by authoritative constituency-level polling showing that its landslide victory just a year ago would be wiped out by right-wing challenger party Reform UK, taking two-thirds of Labour’s MPs with it. 267 Labour MPs, many newly elected, would lose their seats. The British Conservatives would win just 45 constituencies. Reform UK would eat up former Labour and Tory support with 306 gains, putting leader Nigel Farage on course to be the next Prime Minister.
Of course there is no general election imminent, with the next national vote expected in four years, but together with internal rumblings about Starmer’s leadership, it set the backdrop for a bumpy few days at the Labour annual conference after a bumpier first year since Labour returned to power after fourteen years in opposition.
The “Farm Bill High”: How a Hemp Oversight Sparked a Gray-Market Boom
When Congress passed the 2018 Farm Bill, the goal was to help farmers — not to create a new way to get high. Lawmakers from agricultural states pushed to legalize industrial hemp, a non-intoxicating cousin of cannabis, to boost rural economies through new products like rope, textiles, and building materials. The slogan at the time, “Rope, not dope,” made clear the intent: promote agriculture, not open the door to recreational THC.
But that door was left cracked open — and an entire industry has rushed through it.
A gap in the law has spawned a booming gray market for hemp-derived intoxicants. These products — THC-infused gummies, vapes, and seltzers — deliver the same high as more traditional marijuana but are being sold in convenience stores and online, often with no age checks, no potency limits, and no safety standards. They can mimic candy or soda, blurring the line between snack and drug. In some states, you can’t buy a beer until age 21, but a teenager can buy a hemp seltzer with an unknown and unverified amount of THC, no questions asked.
The imbalance is striking. Alcohol is governed by decades of federal and state oversight to prevent abuse and protect public health. Cannabis, where legalized, is tightly regulated through seed-to-sale tracking, child-resistant packaging, and strict potency rules. Yet hemp-derived intoxicants — chemically identical in effect — are being sold in unregulated marketplaces with none of those safeguards. It’s as if the law drew a bright line between similar substances, then forgot to enforce it. Indeed, perhaps most striking is the laissez-faire approach to intoxicating hemp products compared to the strict regulation and accountability measures in place for the sale of tobacco products.
The problem stems from how the 2018 Farm Bill defined hemp as cannabis containing less than 0.3% Delta-9 THC by dry weight. That narrow focus and slippery definition of Delta-9 ignored the potential for other intoxicating cannabinoids — like Delta-8 and Delta-10 — to be synthesized from hemp extracts. Lab innovation quickly outpaced legislation, producing a wave of semi-synthetic THC products that exploit the legal gray zone. The body can’t tell whether THC comes from hemp or marijuana — the effects are the same.
Despite the perception that these products are “federally legal,” the FDA has repeatedly stated they are not approved for human consumption and violate the Food, Drug, and Cosmetic Act. Yet with little enforcement, the market has exploded, leaving states to craft a patchwork of responses. Some have imposed bans or testing requirements, while others have looked the other way, creating confusion for consumers, retailers, and law enforcement alike.
This unregulated marketplace undermines both consumer safety and fair competition. Responsible cannabis businesses face stringent taxes, ID checks, and packaging rules. Meanwhile, hemp-derived THC operators pay no excise taxes, face no potency limits, and market directly to young people. In contrast to common sales of state-legalized cannabis in dispensaries, local media reports show unregulated intoxicating hemp appearing on shelves next to all sorts of food and beverage items, holiday decorations, and even toys. Legitimate hemp farmers — the very people the Farm Bill aimed to support — now find their industry associated with unregulated intoxicants rather than sustainable crops.
Congress has a chance to fix this mistake. Both the House and Senate versions of the FY26 Agriculture Appropriations bills include language to close the “intoxicating hemp loophole.” This isn’t about banning hemp — it’s about restoring the Farm Bill’s original purpose and aligning the law with scientific reality. Hemp should be treated as the agricultural commodity lawmakers intended, not as a legal fiction for manufacturing unregulated THC.
Regulatory clarity isn’t just a matter of bureaucracy — it’s a matter of public trust. When cannabis and hemp are regulated under completely different standards despite producing the same psychoactive effects, consumers lose confidence, and public safety suffers. Congress can — and should — bring sanity and consistency back to hemp policy before the “Farm Bill high” spins even further out of control.
Artificial Intelligence, Not Artificial Litigation
United States-based companies have become world leaders in generative artificial intelligence (AI), which is transforming our lives—from creating better health care diagnostics and treatment to spurring new areas of economic growth. However, even when developed, deployed and used properly, AI can make mistakes. And, some people will use AI for nefarious purposes. These dynamics have led federal and state governments to actively consider how best to regulate generative AI to reduce these risks without impeding the pathways to innovation.
The federal government started this regulatory effort in 2023 with an Executive Order instructing agencies to develop policies to strike this balance. The current President built on this Order by prioritizing an environment in which American AI innovation can flourish. In the states, Colorado became the first to enact a broad AI-specific law in 2024, giving the state attorney general authority to issue AI regulations. This year, Texas adopted a narrower framework. In addition, the California General Assembly passed an AI bill last year, but Governor Newsom vetoed it, opting to allow more time to get this balance right. Governor Youngkin in Virginia did the same this year. In other states, major AI bills have been introduced, but none have been enacted.
Given the economic and national security imperative with AI, state leaders from both political parties have appreciated that getting AI regulation right is critical and that doing the wrong thing poses a risk to the nation as a whole. They have also made clear that while AI may be new, it is just a tool. The fraudulent, unfair or deceptive use of AI—just as with any other software—is already unlawful. State law enforcement officers already have the tools to protect their people.
Accordingly, one of the most controversial ideas making the rounds in the states is introducing what has been called “vigilante actions” or, in legal terminology, private rights of action, for AI enforcement. In these suits, private, for-profit lawyers—not government prosecutors—would be allowed to sue anyone they claim violated the law, regardless of how speculative the assertion or whether anyone was harmed. The lawyers would then keep the statutory penalties for themselves.
Federal and state policymakers have learned the hard lesson that when private lawyers can make money enforcing regulations, they do not necessarily make decisions that are in the public interest. They will often generate high-dollar litigation over minor, technical violations—including when the alleged violation did not harm anyone and even when the violation may not have actually occurred. When similar private rights of action have been included in other regulatory regimes, their trail has been littered with these types of abusive lawsuits, as well as settlements focused on generating money for lawyers, not providing value to consumers, employees or anyone else.
This white paper details the history of private rights of action, how they have led to lawsuit abuse, and why they are neither needed, nor appropriate for regulating AI. Private litigation should stay in its lane. It should be reserved only for seeking remedies for people injured from alleged wrongdoing. And, as Massachusetts Attorney General Campbell made clear last year, people already have robust avenues for seeking such remedies when it comes to AI. Creating more ways for private lawyers to sue over AI is not needed and will cause more harm than good.
Read the full paper here.
Marshall in CNN: How Today’s Democratic Soul-Searching Echoes the Clinton Era
Will Marshall, who has served as the Progressive Policy Institute’s president since its founding, says so many efforts are competing that none is likely to exert as much concentrated influence as the DLC did in its heyday. (The DLC itself officially closed its doors in 2011 but faded as a force in the party after Clinton left office 10 years earlier.) “If you wanted to show that you were a reform-minded Democrat, a modernizing Democrat, you joined up with the DLC and it was really the only enterprise dedicated to changing the party’s governing agenda,” Marshall said. “Now you have a slew of so-called centrist groups that are out there operating independently, and it’s all very disjointed.”
Marshall, like others I spoke with, sees another big obstacle for today’s efforts — these projects are primarily led by consultants and strategists. The DLC, he notes, was defined mostly by elected officials representing politically swing constituencies. That contrast, Marshall says, will make it harder to move these ideas into the party mainstream.
“We had a large cadre of credible Democratic figures-governors, senators, House members, state leaders-who embraced the mission of the new Democrats because they could feel the ground shaking under their feet,” Marshall said. Winning buy-in from large numbers of elected Democrats will be harder today, he says, “because the party is so shrunken, and the number of competitive seats is so shrunken, that the Democrats left standing are mostly safe.”
Marshall for The Hill: Democrats Need Tough Liberals Like Bobby Kennedy
Bending laws and norms to the breaking point, President Trump is ordering political show trials of critics, stifling free speech, subjecting Spanish-speaking citizens to police state tactics and choking our economy with tariffs.
Trump’s MAGA followers greet his autocratic power grabs with vindictive glee — finally, we’re on top! Everyone else is asking: Where are the Democrats?
The party establishment seems adrift, unwilling to make a clean break with flawed policies like Bidenomics, climate alarmism and tolerance of illegal immigration and social disorder that have thoroughly alienated working class voters.
Democrats need a new breed of leader — liberals tough enough to challenge progressive orthodoxies and move the party back to the political mainstream.
For inspiration, they could do worse than look back to Sen. Bobby Kennedy’s (D-N.Y.)1968 presidential campaign. Although tragically cut short by an assassin’s bullet, Kennedy’s run offers Democrats valuable clues for building a bigger, cross-class coalition.
Union Podcast Episode 13
A Better Way to Fix the Pandemic Premium Tax Credit Than Income Caps
One of the biggest obstacles to ending the government shutdown is partisan disagreement about how to address the looming expiration of a pandemic-era expansion of the Affordable Care Act’s (ACA) premium tax credit (PTC). Established in 2014, the PTC gave subsidized health insurance to Americans who didn’t receive it through their employer or the government. The American Rescue Plan (ARP) made this program substantially more generous, including to higher-income households that were never supposed to receive assistance under the original ACA. Democrats want to continue the pandemic PTC expansion in its entirety, while most Republicans want it to expire.
A bipartisan consensus appears to be emerging that the way to better target assistance moving forward and end the shutdown is to impose an income cap on eligibility for the PTC. Unfortunately, this compromise would restore the biggest flaw in the original ACA design that ARP solved: the benefit cliff. Before ARP expanded the PTC, households with income greater than 400% of FPL were not eligible for the ACA subsidy. That meant a single extra dollar of income could trigger thousands of dollars in higher premiums — an abrupt cutoff that discouraged work. Bringing back an income cap today would leave households vulnerable to sudden increases in health-care costs as a penalty for working.
Instead of repeating past mistakes, a better approach would be to establish a gradual phase-out of benefits for households as their income increases. This would smooth out the benefit cliff established under the ACA and avoid giving windfalls to high-income households.
Under PPI’s preferred approach, households with incomes under 300% of FPL would be eligible for the same expanded subsidies next year that they are today. But rather than capping health-care premiums at a certain percentage of recipients’ income, premiums would steadily increase as household income increases. As a result, high-income households’ subsidies would taper off as their earnings increase, thus reducing unnecessary benefits for high earners without recreating the benefit cliff. Subsidies would also fully phase out at lower income levels than they do today.
If lawmakers are concerned about high-income households still qualifying for subsidized health insurance, the best solution is to adjust the phase-out such that a household’s premiums are set to increase starting at a lower level of income. Accordingly, PPI proposes that the phase-in threshold gradually decreases for each of the next two years — similar in concept to a recent proposal from Sen. Mike Rounds (R-S.D.) to gradually phase down the credits back to pre-pandemic levels. But PPI’s proposal preserves free health insurance for families in poverty while still requiring reasonable contributions from middle-income households that can afford it, and lowering benefits for high-income households that don’t need the support.
Along with providing generous support to those who don’t need it, the other problem with simply extending the pandemic PTC expansion is that it is expensive, costing at least $23 billion per year. Rather than cutting health-care costs, it merely shifted the burden onto taxpayers. Fortunately, there are solutions that will both pay for the proposed expansion — letting taxpayers off the hook — and cut health-care costs in the long run.
Medicare Advantage, which allows seniors to receive their Medicare benefits from private insurers, costs taxpayers tens of billions of dollars per year because certain loopholes allow insurance companies to make patients appear sicker than they actually are, which artificially increases their government reimbursements. The No UPCODE ACT would end this practice and save at least $125 billion over 10 years, according to the Committee for a Responsible Federal Budget. Medicare also currently pays far more for services provided in hospital outpatient departments than in independent physician offices, a disparity that encourages hospitals to buy up clinics and drive consolidation — raising costs for patients and taxpayers alike. Adopting site-neutral payments could save $175 billion over the next decade.
Together, these two reforms would fully offset the cost of PPI’s proposed PTC expansion extension on a permanent basis. By eliminating the benefit cliff under the original ACA and establishing gradual phase-outs, PPI’s plan would prevent middle-class families from experiencing a sudden loss in benefits, ensure the poorest families remain protected, and avoid unnecessary tax subsidies for high-income households. These values reflect the goals of the ACA: affordable coverage and strong work incentives. Now is an opportunity for Democrats to push Republicans to adopt thoughtful reforms to the PTC. Millions of Americans are depending on them to get it right.
Manno for Forbes: College Students Reshape Higher Education By Voting With Their Feet
College students are increasingly voting with their feet when choosing a degree program that will produce a return on their financial investment. They are moving away from institutions that offer poor economic returns and toward those with a more promising payoff.
In Learning with Their Feet, Preston Cooper, Senior Fellow at the American Enterprise Institute, offers compelling evidence that students are not just responding to rising costs or demographic shifts. They are actively rejecting or choosing colleges based on quality, value, and outcomes.
Using over a decade of data, he documents a striking divergence in enrollment trends across the postsecondary landscape. Since its peak in 2010, undergraduate enrollment in the United States has declined overall. But that decline is far from uniform.
Ainsley for The Spectator: Labour’s deputy divisions: insider vs outsider?
Tim Shipman and Claire Ainsley from the Progressive Policy Institute join Patrick Gibbons to reflect on Labour’s party conference as it draws to a close in Liverpool. This conference has been received positively for Labour but, on the final day, a hustings for the deputy leadership demonstrated that divides remain under the surface. Is Lucy Powell versus Bridget Phillipson a case of left versus right in the party, or is it more about the outsider versus the insider? And, as a leading political commentator declares Labour to now be the ‘party of the professional middle class’, what does the contest tell us about who Labour needs to appeal to?
Listen to the podcast on the Spectator.
Trump administration tariffs are failing to achieve their goals
FACT: Trump administration tariffs are failing to achieve their goals.
THE NUMBERS: Manufacturing share of U.S. GDP:
| 2025 (Jan. – June) | 9.4% |
| 2024 | 9.8% |
WHAT THEY MEAN:
What is the Trump administration trying to do? Rep. Brendan Boyle (D-Pa.)’s adept questioning of U.S. Trade Representative Jamieson Greer at April’s House Ways and Means Committee hearing (2:30:33) extracted a definition and two measurable goals:
“The deficit [i.e. trade balance] needs to go in the right direction. Manufacturing as a share of GDP needs to go in the right direction.”
Amb. Greer’s two metrics have some pretty serious flaws as definitions of “success.” (See below in “Further Reading” for a brief critique.) But in contrast to vague administration slogans like “production society” and “new golden age,” they’re actual things official stats regularly measure. So, eight months since Mr. Trump’s tariff binge started, how do they look?
1. The manufacturing share of U.S. GDP is smaller: The Commerce Department’s Bureau of Economic Analysis does the official ‘GDP by Industry’ estimate. Its most recent release, out last Thursday, puts the manufacturing share of U.S. GDP at 9.4% this year, down from 9.8% in 2024.
2. The U.S. trade deficit is bigger (but volatile): The Census Bureau’s monthly tallies of U.S. trade flows show a goods-trade deficit of $840 billion so far this year (from January to July), 23% larger than the $682 billion they report for January-July 2024. Alternatively, (a) for manufacturing specifically, this year’s $800 billion deficit outdoes last year’s $655 billion, and (b) the larger goods/services balance at $654 billion is up about 30%n from last year’s $500 billion.
Cautionary note on trade balance, though: The higher 2025 deficit reflects in part a surge of imports in January, February, and March, as worried businesses pushed to get products in and pile up inventories before tariffs went up. Since May, deficits have dropped a bit. Census’ most recent monthly total was $103.9 billion in July, equal (with rounding) to the $104.4 billion in July 2024. This year’s total is pretty certain to be bigger than last year’s, and last July’s summer tax bill will probably push up trade deficits next year (again, see below). But there’s some room for uncertainty.
In sum: So, Amb. Greer’s metrics don’t look very good. In the months since his exchange with Rep. Boyle, both — especially the manufacturing/GDP share — have gone in a pretty clear direction. It’s not the one the administration probably expected or wanted. In common parlance, they seem to be going south.
FURTHER READING
PPI’s four principles for response to tariffs and economic isolationism:
- Defend the Constitution and oppose rule by decree;
- Connect tariff policy to growth, work, prices and family budgets, and living standards;
- Stand by America’s neighbors and allies;
- Offer a positive alternative.
Amb. Greer at the April Ways and Means Committee hearing; exchange on “success” defined by changes in trade balance and the manufacturing share of GDP at 2:20:33. The site also has prepared text and a full hearing video.
… or for a lengthier discussion, see Amb. Greer’s “Reindustrialize America” remarks.
Check the data:
The Bureau of Economic Analysis’ GDP by Industry calculations, updated last Thursday for the first half of 2025.
Census’ most recent monthly FT-900 trade release, with exports, imports, and balances generally, by product type, and by country. Also from Census, see –
… the FT-900 archives back to 1991.
… and a one-page summary of U.S. imports, exports, and trade balances from 1960 to 2024.
Manufacturing share –
Why would tariffs bring down the manufacturing share of GDP? Mainly because manufacturers buy lots of natural resources, capital goods like industrial machinery, inputs like paint and metal, and components and parts from brake-pads to semiconductor chips, light bulbs, and cloth. Taxing these things through the tariff system makes manufacturing here more expensive. Here’s an example, from an appeal filed to the Commerce Department in June by the National Aerosol Association (a trade group representing makers of whipped-cream canisters, perfume spritzers, etc):
“[B]oth the producers and the fillers of metal aerosol packages in the United States face increased prices for their key inputs as a result of the Section 232 tariffs, as tinplate steel, laminate steel, aluminum, and empty aerosol containers made from those metals are all subject to Section 232 tariffs. As a result, these U.S. industries are currently operating at a material disadvantage compared to foreign producers of empty and filled metal aerosol products, none of which face increased prices associated with Section 232 steel and aluminum tariffs.”
As PPI’s Gresser noted last week, the Commerce Department responded in August with a decree declaring that condensed milk and cream are made of metal. Perfume, windshield de-icing fluid, balance beams, propane, and much else too. In effect, the DoC’s solution is not to make “manufacturing in America” less expensive, but to make the relevant goods more expensive for families, too. The likely effect is that they’ll buy less.
And perspective:
Trade balance and the GDP share held by manufacturers can suggest things. But especially when taken alone, they aren’t very reliable gauges of trade policy success specifically, or economic health in general. Some background on both –
1. Manufacturing share of GDP: This is “the size of manufacturing relative to other parts of the economy,” not “how strong is the manufacturing sector.” This ratio could fall during a factory boom if other large parts of the economy — say homebuilding, the digital economy, retail sales – grew even faster. That in fact happened in the late 1990s. Likewise, the “manufacturing share of GDP” could rise in a terrible year, despite lots of factory closures and job loss, if housing and banks crashed even harder. This hasn’t happened recently, but 2009 and 2010 came close.
2. Trade balance: By economic math, the national trade balance equals the gap between national savings and national investment rates. Changes in these “macro” figures change the balance, and trade policy in the sense of agreements, rules, and tariff rates typically has little impact on them. The government’s largest influence on these figures is the fiscal deficit, which is part of the national savings rate. Deficits typically rise after large tax-cut bills — as in the early 1980s, the early 2000s, and the first Trump administration — and trade deficits typically follow it up.
Household savings and business investment levels are even stronger influences than government fiscal balance. Thus, trade deficits tend to rise in boom years (when investment booms and families spend) and fall in recessions (when investment crashes and consumers pull back). For example, in 2009 — this century’s worst year for the U.S. economy generally, for job loss, and for manufacturing specifically — the U.S. trade deficit fell by almost half, from $712 billion to $395 billion or from 5.0% to 2.9% of GDP. No one cheered.
What might be better definitions of success? The typical person would probably think economic policy in generally should try to bring down the cost of living, create growth, and provide more job opportunities, and trade policy should help. It takes work to sift out the effect of trade policy on these things from all the other things that go on in an economy, but that’s what academic economists, the U.S. International Trade Commission, etc., are for.
Read the full email and sign up for the Trade Fact of the Week.
Manno for Forbes: Renewing The Compact For Educational Excellence With K-12 Families
“This situation seems pretty bleak to me,” writes journalist Matthew Yglesias in an article published in The 74 entitled “American Students Are Getting Dumber.” He was reacting to the latest student achievement results from the National Assessment of Educational Progress (NAEP), often called the Nation’s Report Card. He goes on to lament how “we’re suffering mostly from a big national failure to take the educational goals of the school system seriously.” He makes no grand proposal for a way out of this misery. But he implies that the time has come for a renewed educational excellence compact with K-12 public school families.
The NAEP results he laments tell us that the high school class of 2024 posted the lowest 12th-grade reading scores on record and the weakest math performance since 2005. Compared with 2019, 12th-grade scores fell three points in both reading and math, with the largest decline among the lowest-performing students.
Reading scores are lower than any prior senior assessment. Roughly one-third scored below NAEP’s Basic Level in reading, indicating limited comprehension of grade-level prose, not simply texting fluency.
Read more in Forbes.
Canter on FutureEd Webinar: The New Federal Education Tax Credit: Policy and Politics
The Trump administration’s newly passed federal tax credit scholarship program could dramatically reshape the education landscape, providing families with potentially billions of dollars in funding for private schooling, beginning in 2027. But states must opt into the Trump program, raising a host of policy and political questions.
FutureEd hosted a timely conversation about what the program could mean for students, families, and the future of elementary and secondary education. The discussion explores what we know about the program and what’s still undecided, how it could work in practice, the political challenges it poses to state leaders, and what we can learn from states’ past experiences with private school choice programs. Moderated by FutureEd Director Thomas Toch, the conversation featured:
- Rachel Canter, director of education policy at the Progressive Policy Institute
- Jorge Elorza, CEO of Democrats for Education Reform
- Michael J. Petrilli, president of the Thomas B. Fordham Institute
- Jon Valant, director of the Brown Center on Education Policy at the Brookings Institution